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Service Corporation International Reports Record Results for 1997

HOUSTON, Jan. 29 /PRNewswire/ -- Service Corporation International (NYSE: SRV) (SCI), the world's largest funeral and cemetery company, today reported record revenues and earnings for 1997. For the year ended December 31, 1997, the company reported revenues of $2.5 billion, net income of $333.8 million and diluted earnings per share of $1.31 (basic of $1.36). This represents a 7.6 percent increase in revenues, a 25.8 percent increase in net income and a 21.3 percent increase in diluted earnings per share (20.4 percent increase in basic) when compared to 1996. During 1997, SCI operations performed approximately 533,000 funeral services worldwide, 253,000 in North America, 251,000 in Europe and 29,000 on the Pacific Rim.

For the three months ended December 31, 1997, the company reported revenues of $644.0 million, net income of $91.9 million and diluted earnings per share of $.36 (basic of $.36). This represents a 5.7 percent increase in revenues, a 24.6 percent increase in net income and a 20.0 percent increase in diluted earnings per share (16.1 percent increase in basic) over the same period in 1996.

SCI Chairman and Chief Executive Officer Robert L. Waltrip said, "I am very pleased to announce our eighth consecutive year of increased revenues and earnings per share. SCI's consistent earnings growth over the last eight years has resulted in an impressive, compounded annual earnings per share growth rate of 19.6 percent which continues to place SCI in the upper echelon of the S&P 500 for consistent earnings growth."

Acquisition Activity

During 1997, SCI acquired 294 funeral service locations, 51 cemeteries and 19 crematoria at a cost of $643 million. These businesses are expected to produce approximately $260 million in annualized revenues including $180 million from North American operations and $80 million from operations outside North America. Excluding 1994 and 1995, which included major strategic acquisitions in the United Kingdom and France, 1997 was the largest acquisition year in SCI's history.

1997 Fourth Quarter Highlights:

Revenues from existing business clusters in North America, Europe and the Pacific Rim owned for both periods increased 3.3 percent to $612.4 million, contributing $176.0 million to existing cluster operating profit, a 7.8 percent increase over last year.

Compared to the fourth quarter of 1996, Funeral segment revenues increased 1.9 percent to $452.8 million. Growth in Funeral revenues was limited by a reduced number of mortalities in markets served by SCI in the U.S., Europe and Australia, and by the strengthening of the U.S. dollar relative to the French franc, compared to the same period last year. The adverse effect on reported revenues from the company's French operations due to changes in the currency exchange rate was approximately $18 million this quarter ($68 million for the year). Funeral segment profits rose $2.4 million to $111.7 million, an increase of 2.2 percent. Funeral segment margins for the fourth quarter of 1997 increased slightly to 24.7%, compared to 24.6% in the same period of 1996. For the year ended December 31, 1997, Funeral segment margins increased 70 basis points to 23.6%, compared to 22.9% for the year ended 1996.

During the fourth quarter of 1997, sales of prearranged funeral contracts were approximately $136 million ($561 million for the year), which expanded the backlog of prearranged funeral contracts to be serviced in future periods to approximately $3.2 billion. Revenues and associated investment earnings from such contracts are deferred, and will be recognized during the periods in which the funeral services are actually performed.

Compared to fourth quarter of 1996, Cemetery segment revenues increased 15.1 percent to $186.1 million. Cemetery segment profits rose $12.5 million to $70.8 million, an increase of 21.5 percent, reflecting the results of recently acquired cemeteries, increased sales of preneed property and merchandise at existing cemeteries, as well as investment returns associated with the larger asset base from the cemetery merchandise and endowment care trust funds. Cemetery segment margins expanded to 37.9 percent, compared to 35.9 percent for fourth quarter of 1996. For the year ended December 31, 1997, Cemetery segment margins expanded 240 basis points to 37.5%, compared to 35.1% for the year ended 1996.

General and administrative costs decreased 21.5% for the fourth quarter of 1997 to $17.6 million as compared to the same period of 1996. This decrease was the result of a $6 million charge incurred during the fourth quarter of 1996 for expenses associated with the Company's exchange offer for The Loewen Group Inc. which was subsequently withdrawn in January of 1997. For the year ended December 31, 1997, general and administrative costs were $66.8 million, or 2.7 percent of revenues, compared to $63.2 million, or 2.8 percent of revenues, for the prior year.

Interest expense for the fourth quarter of 1997 increased $0.7 million to $36.4 million. Increased indebtedness related to acquisitions was substantially offset by reduced interest rates on indebtedness resulting the Company's refinancing of certain long-term debt during 1997 and hedging programs associated with its international operations. For the year ended December 31, 1997, interest expense was $136.7 million, or 5.5 percent of revenues, compared to $138.6 million, or 6.0 percent of revenues, for the prior year.

As of December 31, 1997, SCI operated 3,127 funeral service locations, 392 cemeteries and 166 crematoria. SCI provides funeral and cemetery services in 17 countries on five continents. SCI's stock is traded on the New York Stock Exchange. The company's ticker symbol is SRV.

The Company has adopted Financial Accounting Standard (FAS) No. 128 "Earnings Per Share". This FAS requires the disclosure of basic and diluted earnings per share, replacing primary and fully diluted earnings per share, respectively. The following earnings per share amounts have been restated to reflect FAS 128.

                         Quarter Ended                 Year
                                                       Ended
            Mar. 31     Jun. 30  Sept. 30   Dec. 31   Dec. 31


    Basic
     1996    $0.31       $0.26     $0.25     $0.31     $1.13
     1997     0.38 (A)    0.33      0.29      0.36      1.36

    Diluted
     1996    $0.29       $0.25     $0.24     $0.30     $1.08
     1997     0.36 (A)    0.31      0.28      0.36      1.31

     (A) Includes a net $.01 from the sale of the Company's
         investment in Equity Corporation International and
         the repurchase by the Company of certain of its
         outstanding debt issues.


                      SERVICE CORPORATION INTERNATIONAL
                       CONSOLIDATED STATEMENT OF INCOME

    (Thousands,
    except            Three Months Ended   Twelve Months Ended
    per share            December 31,          December 31,
    amounts)           1997       1996      1997        1996
    Revenues:
    Funeral           $452,838  $444,356  $1,727,003  $1,663,387
    Cemetery           186,709   162,221     724,862     612,421
    Financial serv       4,447     2,915      16,537      18,386
                       643,994   609,492   2,468,402   2,294,194

    Cost and expenses:
    Funeral            341,095   335,013   1,318,920   1,282,546
    Cemetery           115,944   103,959     452,965     397,700
    Financial serv       2,450     1,677       8,905       9,496
                       459,489   440,649   1,780,790   1,689,742
                       184,505   168,843     687,612     604,452
    General and
     administrative
     expense           (17,566)  (22,378)    (66,781)    (63,215)

    Income from
    operations         166,939   146,465     620,831     541,237

    Interest expense   (36,355)  (35,631)   (136,720)   (138,557)
    Dividends on
     preferred
    securities of
    SCI Finance LLC        ---    (2,695)     (4,382)    (10,781)
    Other income        10,982     6,177      32,167      21,982
    Gain on sale
     of investment         ---       ---      68,077         ---
                       (25,373)  (32,149)    (40,858)   (127,356)
    Income before
     income taxes      141,566   114,316     579,973     413,881
    Provision for
     income taxes       49,686    40,560     205,421     148,583
    Net income before
     extraordinary
     loss               91,880    73,756     374,552     265,298
    Extraordinary loss
     on early
     extinguishment
     of debt (net of
     $23,383 income
     taxes)                ---       ---     (40,802)        ---
    Net income        $ 91,880  $ 73,756    $333,750    $265,298

    Earnings per share:
    Basic:
      Income before
       extraordinary
       loss           $   0.36  $   0.31    $   1.53    $   1.13
      Extraordinary
       loss
       on early
       extinguishment
       of debt             ---       ---       (0.17)        ---
      Net income      $   0.36  $   0.31    $   1.36    $   1.13

     Diluted:
      Income before
       extraordinary
       loss           $   0.36  $   0.30    $   1.47    $   1.08
      Extraordinary loss
       on early
       extinguishment
       of debt             ---       ---       (0.16)        ---
      Net income      $   0.36  $   0.30    $   1.31    $   1.08

    Weighted average
     number of
     common shares     252,112   235,661     245,470     235,299


    Geographic segment information was as follows:
    (Dollars in thousands)


               United               Other     Other
               States     France   European  Foreign     Consol.
    Revenues:
    12 mths. ended Dec. 31:
     1997   $1,588,831  $485,264  $225,087  $169,220  $2,468,402
     1996   $1,409,408  $539,193  $182,830  $162,763  $2,294,194

    Change
     from
     prior
     yr     $  179,423  $(53,929) $ 42,257  $  6,457  $  174,208

    % change
     from
     prior
     yr           12.7%   -10.0%     23.1%      4.0%        7.6%


    3 mths.
     ended
     Dec. 31:
     1997   $  410,361  $129,597  $ 61,783  $ 42,253  $  643,994
     1996   $  375,182  $144,014  $ 49,077  $ 41,219  $  609,492

    Change
     from
     prior
     yr     $   35,179  $(14,417) $ 12,706  $  1,034  $   34,502

    % change
     from
     prior
     yr           9.4%    -10.0%     25.9%      2.5%        5.7%


    Inc. from
     operations:

    12 mths.
     ended
     Dec. 31:
     1997   $  471,237   $ 54,541  $ 44,747  $ 50,306  $ 620,831
     1996   $  400,924   $ 54,305  $ 34,973  $ 51,035  $ 541,237

    Change
     from
     prior
     yr     $   70,313   $    236  $  9,774  $  (729)  $  79,594

    % change
     from
     prior
     yr          17.5%       0.4%     27.9%     -1.4%      14.7%


    3 mths.
     ended
     Dec. 31:
     1997   $  124,322   $ 18,224  $ 13,693   $10,700  $ 166,939
     1996   $  108,071   $ 19,540  $  7,679   $11,175  $ 146,465

    Change
     from
     prior
     yr     $   16,251   $(1,316)  $  6,014   $  (475) $  20,474

    % change
     from
     prior
     yr          15.0%      -6.7%     78.3%      -4.3%     14.0%


    Operating income margin:

    12 mths.
     ended
     Dec. 31:
     1997        29.7%       11.2%    19.9%      29.7%     25.2%
     1996        28.4%       10.1%    19.1%      31.4%     23.6%

    3 mths.
     ended
     Dec. 31:
     1997        30.3%       14.1%    22.2%      25.3%     25.9%
     1996        28.8%       13.6%    15.6%      27.1%     24.0%


    Funeral services performed:

    12 mths. ended Dec. 31:
     1997      231,243     148,223   102,985    50,678    533,129
     1996      217,471     150,269    92,491    50,039    510,270

    3 mths. ended Dec. 31:
     1997       59,333      36,675    26,534    12,556    135,098
     1996       57,285      38,219    22,772    12,342    130,618


    Number of locations at December 31:

     1997        1,574       1,101       712       298      3,685
     1996        1,441       1,056       631       249      3,377

SOURCE Service Corporation International
CONTACT: George R. Champagne, Senior Vice President, Chief Financial Officer or Tom Ryan, Managing Director, Investor Relations, 713-525-9072 or 713-525-5238, both of Service Corporation International CNOC: http: //www.prnewswire.com or fax, 800-758-5804, ext. 104532 WEBSITE: http: //www.sci-corp.com